Employment status within the context of IR35 is a complex and shifting area. Albatel v HMRC highlights the key factors that need to be considered, with ‘control’ by the end user on how the services are provided now appearing the most prominent. Recent cases also highlight HMRC’s approach to assessing IR35 through the use of its enquiry powers. Determining employment status will become increasingly important with the expected off-payroll working legislation taking effect from April 2020.
- What is wrong with being a contractor?
- Can I still use a limited company to offer my services?
- Are businesses using less off-payroll labour?
- Why does there appear to be a flurry of cases in the tax tribunal to challenge IR35?
These and other questions are being asked both in the tax world and in the general financial press. Of course it is ironic that one of the groups of people targeted with HMRC enquiries is the media sector itself.
Wider than even the tax consequences, is the issue of workers rights and the responsibilities of businesses for the use of labour. Here the legal questions are also broad and continue to be debated.
Dawn Register and Rob Woodward wrote for Tax Journal on the topic, published in April 2019. This looks at the cases in the tax tribunal over the last 12 months and considers the implications of wins and the losses for the taxpayer.
The main case reviewed in detail is that of Lorraine Kelly and her personal service company, Albatel Ltd.
Dawn and Rob also consider how HMRC is using its powers, enquiry processes and resources in this area. In conclusion it seems that the controversy and uncertainty is likely to consider for some time.
We expect further tax tribunal decisions in the coming months which will continue to inform this debate. Indeed, a decision relating to Atholl House Productions and the TV presenter Kay Adams was published on 11 April 2019 and provides a further win for the taxpayer.
IR35 is not to be confused with the other parallel campaign against what HMRC call ‘Disguised Remuneration’. In that scenario, we have also seen contractors targeted (not for the use of personal limited companies) but instead for the use of loan arrangements. These often involve companies or trusts offshore that lent money to individuals to minimise or avoid the payment of PAYE and national insurance.
To read the full Tax Journal article, follow the link below.
For other articles relating to employment status, IR35 and off-payroll labour, please view the following related BDO updates:
For any questions regarding dealing with HMRC, please do not hesitate to get in touch for a no-obligation consultation.